Reservation price is:
a. the maximum amount a customer would be willing to pay for a unit of output.
b. the minimum price at which a seller would be willing to supply the product.
c. always equal to the marginal cost
d. the same as market price.
a
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The Commodity Credit Corporation (CCC) instituted several policies to improve the welfare of farmers. Which of the following best describes the programs' effects?
a. The CCC price supports mandated a one-price policy on all agricultural goods. b. The CCC made loans to farmers, using the farmers' future crops as collateral with recourse. c. The CCC price supports inefficiently allocated resources, which decreased welfare. d. If the commodity price increased, according to the free market, then the CCC would command and collect "excess" profits, i.e., revenues in excess of the one-price policy, for use as loanable funds.
A firm's marginal revenue is defined as
a. the ratio of total revenue to total quantity produced. b. the additional output produced by lowering price. c. the additional revenue received due to technical innovation. d. the additional revenue received when selling one more unit of output.
Answer the following statement(s) true (T) or false (F)
1. A sandwich is an example of a club good. 2. Asymmetric information means both parties in a transaction share the same knowledge. 3. Used car sellers are at an advantage over buyers. 4. In adverse selection, one party takes advantage of knowing more than the other. 5. When one party in a sale is dishonest with the other, it is called moral hazard.
An industry would be likely to lay off workers following
A. a successful attempt by an inclusive union to push wages above the marginal revenue product of labor. B. an increase in the price of the firm's product. C. the imposition of a new minimum wage below the current equilibrium wage. D. an increase in the marginal revenue product of labor.